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Feed provided by GAO. Click to visit.GAO-15-626, Army Reserve Components: Improvements Needed to Data Quality and Management Procedures to Better Report Soldier Availability, July 31, 2015http://www.gao.gov/products/GAO-15-626?source=ra
What GAO Found
The Army reserve components do not have complete, accurate, and timely information to report soldiers' non-availability rates. In January 2015, the Army Reserve and the Army National Guard reported overall non-availability rates of 22 and 21 percent, respectively. However, GAO analyzed a limited number of medical, training, and administrative availability-related variables for all 85,000 soldiers in six units during this time period and identified more than 3,800 examples of soldiers' records that were inaccurate, incomplete, or inconsistent. For example, GAO identified soldiers who were listed as available but were incarcerated or had a medically limiting condition. A comprehensive analysis could reveal additional inaccuracies. While the Army reserve component commands and some units perform some data quality reviews to identify and correct discrepancies within the multiple data systems that they rely on for availability data, these reviews examine a limited scope of availability-related variables and are performed infrequently. For example, one system generates a report that identifies a small number of problematic variables, but only reports this information quarterly. Further, it does not provide information specific enough to correct individual problems or cover the full range of variables contributing to inaccurate data. Furthermore, the multiple systems do not interface with each other in a way to allow for timely updates of inconsistent availability information. Without an increase in the scope and frequency of data quality reviews, and improvements to systems to update information in a timely manner, the Army reserve components' availability data will continue to be inaccurate.
The Army reserve components do not verify in a timely manner whether soldiers' injuries or illnesses are service-connected (i.e., occurred in the line of duty) which could lengthen the time that some soldiers are classified as non-available. In January 2015, 81 percent of Army Reserve and 74 percent of the Army National Guard investigations of soldiers' injuries and illnesses were overdue per Army regulation. However, the Army does not have a plan to reduce the existing backlog which officials said is caused in part by soldiers not complying with information requests during investigations. The Army is updating its program guidance to address some of the causes cited for these delays, but as of June 2015, officials stated that the revised regulation had not been issued and did not address soldier noncompliance.
Figure: Army Reserve Components' Backlog of Investigations as of January 2015
Note: Overdue means the investigation has been in process longer than the standard processing time as prescribed by Army Regulation 600-8-4.
Why GAO Did This Study
The sustained readiness and availability of the Army's reserve component forces (the Army Reserve and the Army National Guard) is critical to U.S. national defense. These soldiers comprise over half of the Army's total force and their availability is key, as the Army plans to reduce its number of soldiers over the next several years.
The House Report accompanying the Fiscal Year 2015 National Defense Authorization Act included a provision for GAO to review issues related to the non-availability of soldiers in the Army reserve components. In this report GAO examined, among other things, the extent to which the Army reserve components (1) have complete, accurate, and timely soldier information to report soldiers' non-availability rates and (2) verify in a timely manner whether soldiers' injuries and illnesses are service-connected, as delays can affect soldier non-availability.
GAO reviewed Army regulations and analyzed soldier non-availability data for fiscal years 2012-14; however, due to concerns with data reliability, GAO focused its analysis on January 2015.
What GAO Recommends
GAO recommends that the Army reserve components increase the scope and frequency of data quality reviews; improve data system updates of availability-related information; reduce the backlog of investigations of service-connected injuries and illnesses; and issue revised guidance that addresses causes for the delays. In written comments, DOD agreed with the recommendations and provided additional comments for context.
For more information, contact Brenda S. Farrell at (202) 512-3604 or farrellb@gao.gov.Fri, 31 Jul 2015 13:00:00 -0400GAO-15-536, Nuclear Weapons Sustainment: Improvements Made to Budget Estimates, but Opportunities Exist to Further Enhance Transparency, July 30, 2015http://www.gao.gov/products/GAO-15-536?source=ra
What GAO Found
The annual joint report submitted by the Department of Defense (DOD) and the Department of Energy (DOE) in May 2014 includes 10-year budget estimates for sustaining and modernizing U.S. nuclear weapons (see figure), and these estimates are generally consistent with internal funding and modernization plans, with a few exceptions. For example, GAO could not fully verify that DOD's command, control, and communications estimates were consistent with its internal funding plans, because DOD did not document methodological assumptions and limitations associated with these estimates as GAO had previously recommended. Similarly, DOE's estimates are generally consistent with its internal plans, with two exceptions; for example, the budget estimate for the first five years of the cruise missile warhead life extension program is lower than the cost range in DOE's internal plans.
Figure: Departments of Defense (DOD) and Energy (DOE) 10-Year Estimates for Sustaining and Modernizing the U.S. Nuclear Deterrent as of May 2014
aDOD provides estimates for the nuclear command and control system, which includes early warning radars, aircraft, and communications networks, and for delivery systems, which consist of a variety of platforms such as heavy bombers, air-launched cruise missiles, and ballistic-missile submarines.
bDOE provides estimates for the nuclear weapons stockpile (seven types of weapons) and the nuclear security enterprise (eight geographically dispersed sites).
The 2014 report includes information that was not included in the 2013 report—such as estimates for the Air Force's new long range bomber and some DOE construction projects—but opportunities exist to further enhance transparency. DOD did not describe in detail the methodology used to develop some estimates, even though the Air Force and Navy used different methodologies for estimates of sustaining and modernizing nuclear delivery systems, and the Air Force changed the methodology it had used previously. Also, DOD's estimates for nuclear delivery systems increased by about 40 percent from last year's report, due in part to changes in the methodologies used to develop them, but the report does not provide comparative information about changes in the estimates from those in the 2013 report. Further, DOE inadvertently omitted budget estimates in fiscal years 2020 through 2024 for two planned activities, thus understating its estimates by $1.6 billion. Without thorough documentation of methodologies and comparative information, it may be difficult for Congress to understand the basis for the estimates or assess long-term affordability when allocating resources.
Why GAO Did This Study
DOD and DOE are undertaking an extensive, multifaceted effort to sustain and modernize U.S. nuclear weapons capabilities, which are aging and being deployed beyond their intended service lives. This effort is expected to take decades and cost hundreds of billions of dollars. Section 1043 of the National Defense Authorization Act for Fiscal Year 2012, as amended, requires the submission of an annual report to congressional committees on DOD's and DOE's plans for related matters, including 10-year budget estimates, and includes a provision that GAO review aspects of that report. In June 2014, GAO reviewed the July 2013 joint report and made recommendations to improve future reports, such as documenting the methodology used to create certain estimates and identifying its assumptions and limitations.
This report assesses the extent to which the May 2014 joint report provides (1) budget estimates that are consistent with the departments' internal funding and modernization plans and (2) complete and transparent information on the methodology used to develop the estimates.
What GAO Recommends
GAO recommends that future joint reports provide more thorough documentation of the methodologies used to develop the estimates and comparative information on changes in the estimates from the prior year. DOD and DOE generally agreed, but DOD noted that information on changes is not required. GAO continues to believe the recommendation is valid as discussed further in this report.
For more information, contact Joe Kirschbaum at (202) 512-9971 or kirschbaumj@gao.gov or David Trimble at (202) 512-3841 or trimbled@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-635R, Medical Device Companies: Trends in Reported Net Sales and Profits Before and After Implementation of the Patient Protection and Affordable Care Act, June 30, 2015http://www.gao.gov/products/GAO-15-635R?source=ra
What GAO Found
The Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA), contained a number of provisions intended to increase the availability and affordability of health insurance coverage while also controlling costs. To help finance these coverage expansions, PPACA included a 2.3 percent excise tax on the sale of certain medical devices in the United States after December 31, 2012. GAO analyzed information on net sales and profits for 102 medical device companies before and after implementation of PPACA provisions. This analysis does not infer a causal relationship between these provisions and changes in companies’ net sales or profits, because any changes could be due to other factors, such as mergers and acquisitions, the introduction of new products, and product recalls.
Specifically, GAO’s analysis found that 102 medical device companies reported net sales and profits that increased overall from 2005 through 2014 (in constant 2014 dollars), but results varied by company size.
Net sales increased overall for these companies from about $95 billion in 2005 to about $136 billion in 2014—about a 43 percent increase over the period and an average annual increase of about 4 percent. Among these 102 companies, the 30 large-sized companies accounted for at least 95 percent of the total net sales in each year.
Net profits for the 102 medical device companies also increased overall from about $11.4 billion in 2005 to about $16.5 billion in 2014—about a 44 percent increase over the period and an average annual rate of increase of about 4 percent. The 30 large-sized medical device companies experienced an overall net increase in profits over the period, from $11.8 billion to $16.9 billion (43 percent), an average annual rate of increase of about 4 percent. In contrast, the 35 medium-sized and 37 small-sized medical device companies GAO reviewed each experienced overall net losses in each year.
Most of the 102 companies reported uncertainty about the full impact of PPACA in their 2014 financial disclosure statements submitted to the Securities and Exchange Commission (SEC), and some companies reported likely impacts from the medical device excise tax, reimbursement changes, and coverage expansions. Specifically, 75 of the 102 medical device companies reported that they were uncertain about the law’s full impact on their businesses. While the full impact of PPACA was unclear to many of these companies, more than half of the 102 companies noted that the medical device excise tax may have an impact on their businesses or has already impacted it. Additionally, more than half of the 102 companies reported that changes in reimbursements for medical devices or other cost controls resulting from PPACA have had or may have an impact on their businesses, and 15 of the companies reported that they were uncertain about how coverage expansions resulting from PPACA might impact their businesses. Industry trade group representatives GAO interviewed also said that the medical device excise tax and changes in reimbursements have had the greatest impact on their member companies.
Why GAO Did This Study
GAO was asked to examine trends in medical device sales and profits over the last decade, including before and after the implementation of PPACA. In this study, GAO examined net sales and net profits from 2005 through 2014 reported by certain publicly traded companies whose primary revenue source is from medical devices and how these companies reported being affected by PPACA in public financial disclosure statements. GAO adjusted 2005 through 2014 net sales and net profit data obtained from SEC to constant 2014 U.S. dollars for the 102 medical device companies reporting this information each year during the period and analyzed trends. GAO defined categories for company size based on a review of 2013 market capitalization—that is, the total combined value of the company’s stock—and the company’s SEC filing status. In addition, GAO reviewed these companies’ 2014 financial disclosure statements from the SEC website to determine if and how they described being affected by PPACA and also interviewed representatives of three medical device industry trade groups to obtain their perspectives on the effects of PPACA.GAO reviewed 2014 financial disclosure statements because, in addition to being the most recent year available, 2014 was the year after which many PPACA provisions went into effect. The inclusion or absence of a discussion of the impact of PPACA on medical device companies in public financial disclosure statements does not provide a comprehensive assessment of the impact of PPACA because companies have discretion over the factors they choose to report. The results of GAO’s analyses are not generalizable to all medical device companies because GAO obtained data that excluded medical device companies that are not required to submit financial disclosure reports to SEC, such as private companies that have a limited number of shareholders or do not have stock listed on a U.S. stock exchange.
What GAO Recommends&nbsp;
GAO is not making any recommendations. SEC provided technical comments, which GAO incorporated into the report as appropriate.
For more information, contact John Dicken at (202) 512-7114 or dickenj@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-677, Medicaid: Key Issues Facing the Program, July 30, 2015http://www.gao.gov/products/GAO-15-677?source=ra
What GAO Found
GAO identified four key issues facing the Medicaid program, based on prior work.
Access to care : Medicaid enrollees report access to care that is generally comparable to that of privately insured individuals and better than that of uninsured individuals, but may have greater health care needs and greater difficulty accessing specialty and dental care.
Transparency and oversight : The lack of complete and reliable data on states' spending—including provider payments and state financing of the non-federal share of Medicaid—hinders federal oversight, and GAO has recommended steps to improve the data on and scrutiny of states' spending. Also, improvements in the Department of Health and Human Services' (HHS) criteria, policy, and process for approving states' spending on demonstrations—state projects that may test new ways to deliver or pay for care—are needed to potentially prevent billions of dollars in unnecessary federal spending, as GAO previously recommended.
Program integrity : The program's size and diversity make it vulnerable to improper payments. Improper payments, such as payments for non-covered services, totaled an estimated $17.5 billion in fiscal year 2014, according to HHS. An effective federal-state partnership is key to ensuring the most appropriate use of funds by, among other things, (1) setting appropriate payment rates for managed care organizations, and (2) ensuring only eligible individuals and providers participate in Medicaid.
Federal financing approach : Automatic federal assistance during economic downturns and more equitable federal allocations of Medicaid funds to states (by better accounting for states' ability to fund Medicaid) could better align federal funding with states' needs, offering states greater fiscal stability. GAO has suggested that Congress could consider enacting a funding formula that provides automatic, timely, and temporary increased assistance in response to national economic downturns.
Medicaid's ongoing transformation—due to the Patient Protection and Affordable Care Act (PPACA), the aging of the U.S. population, and other changes to state programs—highlights the importance of federal oversight, given the implications for enrollees and program costs. Attention to Medicaid's transformation and the key issues facing the program will be important to ensuring that Medicaid is both effective for the enrollees who rely on it and accountable to the taxpayers. GAO has multiple ongoing studies in these areas and will continue to monitor the Medicaid program for the Congress.
Why GAO Did This Study
The Medicaid program marks its 50th anniversary on July 30, 2015. The joint federal-state program has grown to be one of the largest sources of health care coverage and financing for a diverse low-income and medically needy population. Medicaid is undergoing transformative changes, in part due to PPACA, which expanded the program by allowing states to opt to cover low-income adults in addition to individuals in historic categories, such as children, pregnant women, older adults, and individuals with disabilities.
GAO has a large body of work on challenges facing Medicaid and gaps in federal oversight. This report describes (1) key issues that face the Medicaid program based on this work, and (2) program and other changes with implications for federal oversight. GAO reviewed its reports on Medicaid issued from January 2005 through July 2015; reviewed documentation from the Centers for Medicare &amp; Medicaid Services (CMS), the HHS agency that oversees Medicaid; and interviewed CMS officials.
What GAO Recommends
GAO has made over 80 recommendations regarding Medicaid, some of which HHS has implemented. GAO has highlighted 24 key recommendations that have not been implemented. HHS agreed with and is acting on some and did not agree with others. GAO continues to believe that all of its recommendations have merit and should be implemented. HHS provided technical comments on a draft of this report, which GAO incorporated as appropriate.
For more information, contact Katherine M. Iritani at (202) 512-7114 or iritanik@gao.gov or Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-630, Management Report: Improvements Needed in Controls over the Processes Used to Prepare the U.S. Consolidated Financial Statements, July 30, 2015http://www.gao.gov/products/GAO-15-630?source=ra
What GAO Found
During its audit of the fiscal year 2014 consolidated financial statements of the U.S. government (CFS), GAO identified control deficiencies in the Department of the Treasury's (Treasury) and the Office of Management and Budget's (OMB) processes used to prepare the CFS. These control deficiencies contributed to material weaknesses in internal control over the federal government's ability to
adequately account for and reconcile intragovernmental activity and balances between federal entities;
reasonably assure that the consolidated financial statements are (1) consistent with the underlying audited entities' financial statements, (2) properly balanced, and (3) in accordance with U.S. generally accepted accounting principles; and
reasonably assure that the information in the Reconciliation of Net Operating Cost and Unified Budget Deficit and the Statement of Changes in Cash Balance from Unified Budget and Other Activities is complete and consistent with the underlying information in the audited entities' financial statements and other financial data.
During its audit of the fiscal year 2014 CFS, GAO identified three new internal control deficiencies. Specifically, GAO found that Treasury did not have
a sufficient process to work with key federal entities prior to the end of the fiscal year to reasonably assure that new or substantially revised federal accounting standards were consistently implemented by the entities to allow appropriate consolidation at the government-wide level,
procedures for determining whether entities and transactions for which it does not have audit assurance are significant in the aggregate to the CFS, and
sufficient procedures for (1) identifying significant increases or decreases in all CFS line items and disclosures from prior fiscal year reported amounts and (2) understanding the reasons for such changes.
In addition, GAO found that various other control deficiencies identified in previous years' audits with respect to the processes used to prepare the CFS continued to exist. Specifically, 24 of the 31 recommendations from GAO's prior reports regarding control deficiencies in the processes used to prepare the CFS remained open as of February 19, 2015, the date of GAO's report on its audit of the fiscal year 2014 CFS. GAO will continue to monitor the status of corrective actions taken to address the 3 new recommendations made in this report as well as the 24 open recommendations from prior years as part of its fiscal year 2015 CFS audit.
Why GAO Did This Study
Treasury, in coordination with OMB, prepares the Financial Report of the United States Government , which contains the CFS. Since GAO's first audit of the fiscal year 1997 CFS, certain material weaknesses and other limitations on the scope of its work have prevented GAO from expressing an opinion on the accrual-based CFS. As part of the fiscal year 2014 CFS audit, GAO identified material weaknesses and other control deficiencies in the processes used to prepare the CFS. The purpose of this report is to provide (1) details on the control deficiencies GAO identified related to the processes used to prepare the CFS, along with related recommendations, and (2) the status of corrective actions Treasury and OMB have taken to address GAO's prior recommendations relating to the processes used to prepare the CFS that remained open at the end of the fiscal year 2013 audit.
What GAO Recommends
GAO is making three new recommendations to Treasury to address the control deficiencies identified during the fiscal year 2014 CFS audit. In commenting on GAO's draft report, Treasury and OMB generally concurred with GAO's recommendations.
For more information, contact Dawn B. Simpson at (202) 512-3406 or simpsondb@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-515, Hurricane Sandy: An Investment Strategy Could Help the Federal Government Enhance National Resilience for Future Disasters, July 30, 2015http://www.gao.gov/products/GAO-15-515?source=ra
What GAO Found
During the Hurricane Sandy Recovery, five federal programs—the Federal Emergency Management Agency's (FEMA) Public Assistance (PA), Hazard Mitigation Grant Program (HMGP), the Federal Transit Administration's Public Transportation Emergency Relief Program, the Department of Housing and Urban Development's Community Development Block Grant-Disaster Recovery, and the U.S. Army Corps of Engineers' Hurricane Sandy program—helped enhance disaster resilience—the ability to prepare and plan for, absorb, recover from, and more successfully adapt to disasters. These programs funded a number of disaster-resilience measures, for example, acquiring and demolishing at-risk properties, elevating flood-prone structures, and erecting physical flood barriers.
State and local officials from the states affected by Hurricane Sandy GAO contacted reported that they were able to effectively leverage federal programs to enhance disaster resilience, but also experienced challenges that could result in missed opportunities. The challenges fell into three categories:
implementation challenges with PA and HMGP—for example, officials reported that FEMA officials did not always help them pursue opportunities to incorporate mitigation into permanent construction recovery projects;
limitations on comprehensive risk reduction approaches in a postdisaster environment—for example, officials reported difficulties with navigating multiple funding streams and various regulations of the different federal programs funded after Hurricane Sandy; and
local ability and willingness to participate—for example, officials reported that some home and business owners were unwilling or unable to bear the required personal cost share for a home-elevation or other mitigation project.
FEMA officials told us that they were aware of some of these challenges and recognize the need to further assess them. Assessing the challenges and taking corrective actions, as needed, could help enhance disaster resilience.
There is no comprehensive, strategic approach to identifying, prioritizing and implementing investments for disaster resilience, which increases the risk that the federal government and nonfederal partners will experience lower returns on investments or lost opportunities to strengthen key critical infrastructure and lifelines. Most federal funding for hazard mitigation is available after a disaster. For example, from fiscal years 2011-2014, FEMA obligated more than $3.2 billion for HMGP postdisaster hazard mitigation while the Pre-Disaster Mitigation Grant Program obligated approximately $222 million. There are benefits to investing in resilience postdisaster. Individuals and communities affected by a disaster may be more likely to invest their own resources while recovering. However, there are also challenges. Specifically, the emphasis on the postdisaster environment can create a reactionary and fragmented approach where disasters determine when and for what purpose the federal government invests in disaster resilience. The Mitigation Framework Leadership Group (MitFLG) was created to help coordinate hazard mitigation efforts of relevant local, state, tribal, and federal organizations. A comprehensive investment strategy, coordinated by MitFLG, could help address some challenges state and local officials experienced.
Why GAO Did This Study
The Disaster Relief Appropriations Act of 2013 appropriated about $50 billion for recovery from Hurricane Sandy, part of which was intended for disaster resilience and hazard mitigation. In March 2015, GAO identified the cost of disasters as a key source of federal fiscal exposure. GAO and others have advocated hazard mitigation to help limit the nation's fiscal exposure.
GAO was asked to review federal efforts to strengthen disaster resilience during Hurricane Sandy recovery. This report addresses (1) how federal recovery funds were used to enhance resilience, (2) the extent to which states and localities were able to maximize federal funding to enhance resilience; and (3) actions that could enhance resilience for future disasters.
To conduct this work, GAO reviewed key federal documents such as the National Mitigation Framework , interviewed federal officials responsible for programs that fund disaster resilience, and administered structured interviews and surveys to all 12 states, the District of Columbia, and New York City in the Sandy affected-region.
What GAO Recommends
GAO recommends that (1) FEMA assess the challenges state and local officials reported and implement corrective actions as needed and (2) MitFLG establish an investment strategy to identify, prioritize, and implement federal investments in disaster resilience. The Department of Homeland Security agreed with both.
For more information, contact Chris Currie at (404) 679-1875 or curriec@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-526, Great Lakes Restoration Initiative: Improved Data Collection and Reporting Would Enhance Oversight, July 21, 2015http://www.gao.gov/products/GAO-15-526?source=ra
What GAO Found
Nearly all of the $1.68 billion of federal funds made available for the Great Lakes Restoration Initiative (GLRI) for fiscal years 2010 through 2014 had been allocated as of January 2015. Of the $1.66 billion allocated, the Environmental Protection Agency (EPA) and the other Task Force agencies expended $1.15 billion for 2,123 projects (see fig.). Agencies can liquidate and adjust obligations for 7 years after funds are no longer available for obligation.
Status of GLRI Funds, Fiscal Years 2010 through 2014
The Task Force's process to identify each agency's GLRI work and funding has evolved to emphasize interagency discussion. In fiscal year 2012, the Task Force created subgroups to discuss and identify work on three issues, setting aside about $180 million for these issues over 3 years. This included cleaning up severely degraded locations called Areas of Concern, such as the White Lake Area of Concern in Michigan that involved sediment cleanup; preventing invasive species; and reducing nutrient runoff. EPA officials told GAO that the Task Force created additional subgroups to identify all GLRI work and funding beginning in 2015.
The Task Force has made some information about GLRI project activities and results available to Congress and the public in three accomplishment reports. In addition, the individual Task Force agencies collect information on activities and results, although this information is not collected and reported by EPA. The conference report accompanying the Department of the Interior Appropriations Act for fiscal year 2010 directed EPA to establish a process to ensure monitoring and reporting on the progress of the GLRI. EPA created the Great Lakes Accountability System (GLAS) to monitor and report on GLRI progress, but some GLAS data are inaccurate, in part, because EPA did not provide clear guidance on entering certain information and GLAS did not have data quality controls. According to EPA officials, the agency replaced GLAS and, in May 2015, began an initial period of data entry into the new system. EPA also provided guidance on entering information into the new system and plans to establish data control activities for ensuring the reliability of the new system. Fully implementing these control activities should ensure that EPA can have confidence that the system can produce data that are accurate and complete.
Why GAO Did This Study
The GLRI seeks to address issues such as water quality contamination and nonnative, or “invasive,” species that threaten the health of the Great Lakes ecosystem. A Task Force of 11 federal agencies, chaired by the EPA Administrator, oversees the GLRI. Task Force agencies conduct work themselves or through agreements with nongovernmental organizations, academic institutions, or other entities.
GAO was asked to review how GLRI funds have been used. This report examines the (1) amount of federal funds made available for the GLRI and expended for projects; (2) process the Task Force used to identify GLRI work and funding; and (3) information available about GLRI project activities and results. GAO analyzed funding data for the GLRI and five agencies that received the majority of GLRI funds; GLAS data; accomplishment reports; and 19 GLRI projects selected by funding amounts and agencies to illustrate projects with typical funding amounts. This sample is not generalizable to all projects.
What GAO Recommends
Among other things, GAO recommended in its draft report that EPA determine if it should continue using GLAS or acquire a different system and ensure that the agency develops guidance for entering data and establishes data quality control activities. EPA took action to address these recommendations as GAO completed its work. GAO reviewed the actions taken and determined that the recommendations had been addressed. As a result, GAO removed the recommendations.
For more information, contact J. Alfredo Gómez at (202) 512-3841 or gomezj@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-583R, Federal Autism Research: Updated Information on Funding from Fiscal Years 2008 through 2012, June 30, 2015http://www.gao.gov/products/GAO-15-583R?source=ra
What GAO Found
Although federal funding for autism research fluctuated from fiscal years 2008 through 2012, it increased overall during this period, from approximately $169 million in fiscal year 2008 to $245 million in fiscal year 2012—about a 45 percent increase (about a 37 percent increase when adjusted for inflation to fiscal year 2012 dollars). Over this time period, the National Institutes of Health (NIH) consistently provided the majority of autism research funding—between about 76 and 83 percent of the total funding awarded each fiscal year. The highest funding levels were in fiscal years 2009 and 2010, in part, as a result of additional funds appropriated to NIH under the American Recovery and Reinvestment Act of 2009. While overall funding increased, federal funding varied by each of the seven research areas specified in the Interagency Autism Coordinating Committee’s (IACC) strategic plan. These research areas are biology, treatments and interventions, causes, diagnosis, infrastructure and surveillance, services, and lifespan issues. The following figure shows the changes in funding by fiscal year for each of the seven research areas, as well as the overall average annual percent change in funding for each research area.
Federal Funding and Average Annual Percent Change by Autism-Related Research Area from Fiscal Years (FY) 2008 through 2012
Note: The research areas noted in the figure were established by the Interagency Autism Coordinating Committee’s (IACC) strategic plan. The federal agencies that funded autism research during the time period are the Department of Defense; Department of Education; Environmental Protection Agency; National Science Foundation; and seven agencies within the Department of Health and Human Services: Administration for Children and Families, Agency for Healthcare Research and Quality, Centers for Disease Control and Prevention, Centers for Medicare &amp; Medicaid Services, Health Resources and Services Administration, National Institutes of Health, and the Substance Abuse and Mental Health Services Administration. In this figure, all dollars are expressed in nominal terms.
Why GAO Did This Study
The Centers for Disease Control and Prevention (CDC) estimates that about 1 in 68 children have been identified as having autism—a developmental disorder involving communication and social impairment. According to CDC, there are likely many causes of autism and many factors, including environmental, biologic, and genetic, that may make a child more likely to have autism. There is no known cure for autism; however,research shows that early intervention can greatly improve a child’s development. From fiscal years 2008 through 2012, 11 federal agencies awarded approximately $1.2 billion to fund autism research.
GAO was asked to examine federal autism research funding. In this report, GAO describes how the amount of federal funding in each of the research areas specified in the IACC’s strategic plan changed from fiscal years 2008 through 2012. GAO analyzed data previously collected for GAO-14-16, Federal Autism Activities: Better Data and More Coordination Needed to Help Avoid the Potential for Unnecessary Duplication, including updated data, to identify changes in agency funding awarded from fiscal years 2008 through 2012. Data by strategic plan research area for fiscal years 2013 and 2014 are not currently available. To calculate the changes in federal autism funding awarded, GAO analyzed the data by IACC strategic plan research area, including any growth or decreases in each area by fiscal year and agency.
What GAO Recommends
GAO is not making any recommendations. GAO provided a draft of this report to the Department of Defense, Department of Education, the Environmental Protection Agency, Department of Health and Human Services, and the National Science Foundation. GAO received technical comments from the Department of Defense, Department of Education, Department of Health and Human Services, and the National Science Foundation, which GAO incorporated as appropriate. The Environmental Protection Agency did not provide any comments.
For more information, contact Marcia Crosse at (202) 512-7114 or crossem@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-621, Facial Recognition Technology: Commercial Uses, Privacy Issues, and Applicable Federal Law, July 30, 2015http://www.gao.gov/products/GAO-15-621?source=ra
What GAO Found
Facial recognition technology can be used in numerous consumer and business applications, but the extent of its current use in commercial settings is not fully known. The technology is commonly used in software that manages personal photographs and in social networking applications to identify friends. In addition, several companies use the technology to provide secure access to computers, phones, and gaming systems in lieu of a password. Facial recognition technology can have applications for customer service and marketing, but at present, use in the United States of the technology for such purposes appears to be largely for detecting characteristics (such as age or gender) to tailor digital advertising, rather than identifying unique individuals. Some security systems serving retailers, banks, and casinos incorporate facial recognition technology, but the extent of such use at present is not fully known.
Privacy advocacy organizations, government agencies, and others have cited several privacy concerns related to the commercial use of facial recognition technology. They say that if its use became widespread, it could give businesses or individuals the ability to identify almost anyone in public without their knowledge or consent and to track people's locations, movements, and companions. They have also raised concerns that information collected or associated with facial recognition technology could be used, shared, or sold in ways that consumers do not understand, anticipate, or consent to. Some stakeholders disagree that the technology presents new or unusual privacy risks, noting, among other things, that individuals should not expect complete anonymity in public and that some loss of privacy is offset by the benefits the technology offers consumers and businesses.
Several government, industry, and privacy organizations have proposed or are developing voluntary privacy guidelines for commercial use of facial recognition technology. Suggested best practices vary, but most call for disclosing the technology's use and obtaining consent before using it to identify someone from anonymous images. The privacy policies of companies GAO reviewed varied in whether and how they addressed facial recognition technology.
No federal privacy law expressly regulates commercial uses of facial recognition technology, and laws do not fully address key privacy issues stakeholders have raised, such as the circumstances under which the technology may be used to identify individuals or track their whereabouts and companions. Laws governing the collection, use, and storage of personal information may potentially apply to the commercial use of facial recognition in specific contexts, such as information collected by health care entities and financial institutions. In addition, the Federal Trade Commission Act has been interpreted to require companies to abide by their stated privacy policies. Stakeholder views vary on the efficacy of voluntary and self-regulatory approaches versus legislation and regulation to protect privacy. GAO has previously concluded that gaps exist in the consumer privacy framework, and the privacy issues that have been raised by facial recognition technology serve as yet another example of the need to adapt federal privacy law to reflect new technologies.
Why GAO Did This Study
Facial recognition technology—which can verify or identify an individual from a facial image—has rapidly improved in performance and now can surpass human performance in some cases. The Department of Commerce has convened stakeholders to review privacy issues related to commercial use of this technology, which GAO was also asked to examine.
This report examines (1) uses of facial recognition technology, (2) privacy issues that have been raised, (3) proposed best practices and industry privacy policies, and (4) potentially applicable privacy protections under federal law. The scope of this report includes use of the technology in commercial settings but not by government agencies. To address these objectives, GAO analyzed laws, regulations, and documents; interviewed federal agencies; and interviewed officials and reviewed privacy policies and proposals of companies, trade groups, and privacy groups. Companies were selected because they were among the largest in industries identified as potential major users of the technology, and privacy groups were selected because they had written on this issue.
What GAO Recommends
GAO makes no recommendations in this report. However, GAO suggested in GAO-13-663 that Congress consider strengthening the consumer privacy framework to reflect changes in technology and the marketplace, and facial recognition technology is such a change. GAO maintains that the current privacy framework in commercial settings warrants reconsideration.
For more information, contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-591, Credit Rating Analysts: Views Varied on Merits of a Professional Organization, but Creating One Now Viewed as Premature, July 30, 2015http://www.gao.gov/products/GAO-15-591?source=ra
What GAO Found
Views varied on the merits of a professional organization for credit rating analysts of nationally recognized statistical rating organizations (NRSRO), but some concluded it was too early to tell if one was needed, in part because of new Securities and Exchange Commission (SEC) requirements on NRSROs to establish standards for their analysts. The analysts, representatives of NRSROs and existing professional organizations, and experts and stakeholders (including academics, investors, advocacy groups, and international regulators) with whom GAO spoke said the merits of such an organization included improving the industry's reputation, enhancing the quality of work done by the professionals, and supplementing existing oversight. However, some said creating such an organization could duplicate existing standards, codes of conduct, or the services provided by other professional organizations. Some said that establishing a professional organization without evaluating the effectiveness of SEC's new regulations (which became effective in June 2015) would be premature. These rules require each NRSRO to establish training, experience, and competence standards to ensure analysts produce accurate ratings and to periodically test analysts' knowledge of the NRSRO's procedures and methodologies. Thus, some held the view that it was too early to determine in what areas a professional organization might add value—that is, add to or complement (rather than duplicate) standards, codes of conduct, training, or oversight—or if one was needed at all.
Creating and operating a professional organization for NRSRO credit rating analysts would not be without certain challenges. According to most analysts and representatives of NRSROs and some experts and stakeholders, the challenges primarily would relate to achieving the following aims:
Clearly delineated purpose . Delineating the mission or purposes of an organization would be difficult at the present time because the effects of the new SEC regulations were unknown.
Adequate funding. Obtaining sufficient funding through membership fees also might be difficult because of the relatively small population of analysts (about 4,500 as of 2014) to provide the fees.
Balanced representation. Creating an organizational structure that would provide equitable representation for all members, including from smaller NRSROs, could be challenging because of industry concentration (88 percent of analysts work for 3 of the 10 NRSROs).
Meaningful activities. Developing core activities and services, including professional standards, education and training curricula, certification tests, and structures to oversee member compliance could be challenging because of differences in NRSRO methodologies, concerns about sharing confidential information, and analyst specialization in specific rating classes (such as insurance or asset-backed securities).
Why GAO Did This Study
The 2007–2009 financial crisis renewed concerns about the integrity of the credit rating industry. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) imposed new requirements on NRSROs and required SEC to implement regulations for training, experience, and competence of credit rating analysts. The Dodd-Frank Act also included a provision for GAO to conduct a study on the merits and feasibility of creating a professional organization for rating analysts employed by NRSROs.
This report describes views on (1) the potential merits of and need for a professional organization for credit rating analysts, and (2) any challenges associated with creating and operating such an organization. For this report, GAO reviewed SEC documentation and academic literature; held focus groups with approximately 100 credit rating analysts from different-sized firms who had a range of experience and skills; and interviewed SEC staff, representatives from all 10 NRSROs, and experts and stakeholders (including, academics, investors, advocacy groups, and international regulators). GAO also analyzed the structure and activities of six professional organizations that develop and oversee professional standards and a code of conduct, and interviewed representatives of the organizations.
For more information, contact Mathew Scirè, 202-512-8678, sciremj@gao.gov.Thu, 30 Jul 2015 13:00:00 -0400GAO-15-540, Patient Protection and Affordable Care Act: IRS Needs to Strengthen Oversight of Tax Provisions for Individuals, July 29, 2015http://www.gao.gov/products/GAO-15-540?source=ra
What GAO Found
In January 2015, the Internal Revenue Service (IRS) began verifying taxpayers' premium tax credit (PTC) claims using marketplace data on enrollments and advance payments of the PTC. IRS is using its standard examination processes to check the coverage, exemption, or shared responsibility payment (SRP) information taxpayers report. IRS's overall goals are to efficiently and effectively enforce compliance with tax laws, reduce taxpayer burden, and encourage voluntary compliance.
Incomplete and delayed marketplace data limited IRS's ability to match taxpayer PTC claims to marketplace data at the time of return filing. Complete marketplace data for the 2014 coverage year were due to IRS in January, but due to marketplace delays in transmitting the data and IRS technical difficulties with processing the data for matching, as of March 21, 2015, IRS had complete data available for verification of taxpayer PTC claims for 4 of the 51 marketplace states (i.e., the 50 states and the District of Columbia). IRS does not know whether these challenges are a single year or an ongoing problem. According to IRS officials, IRS checks the formatting, but not the accuracy of the data. Although IRS implemented contingency plans to compensate for missing and inaccurate data, those processes were more burdensome for taxpayers. Assessing whether the problems with the timeliness and reliability of the marketplace data are expected to be an ongoing challenge, rather than just a first-year problem, would help IRS understand how it can use the data effectively and better target contingency plans.
IRS does not know the total amount of advance PTC payments made to insurers for 2014 marketplace policies because marketplace data are incomplete. Without this information, IRS does not know the aggregate amount of advance PTC that taxpayers should have reported on 2014 tax returns. Thus, IRS does not know the size of the gap between advance PTC paid and reported or the extent of noncompliance with the requirement for recipients of advance PTC payments to accurately report those payments on their tax return, a measure that could help IRS assess the effectiveness of its education, outreach, and compliance efforts.
Successful implementation of the PTC and individual shared responsibility tax provisions requires IRS collaboration with the Centers for Medicare &amp; Medicaid Services (CMS)—which is responsible for overseeing the marketplaces—and the marketplaces, and communication with other stakeholders, such as tax software companies, employers, and health insurers. IRS worked to collaborate and communicate with external stakeholders to implement PPACA requirements for tax year 2014. However, several external stakeholders GAO spoke with reported challenges with IRS collaboration efforts, such as not receiving certain IRS guidance in time for stakeholders to have complete information at the beginning of the filing season. IRS is evaluating opportunities for improving return processing and the taxpayer experience, but is not evaluating its collaboration efforts. Without an assessment of its efforts to collaborate and communicate with key external stakeholders, challenges in implementing the 2014 PPACA requirements that relied on these groups could also affect new requirements taking effect in 2015, including new information reporting requirements for the State-based Marketplaces, issuers of coverage, and applicable large employers.
Why GAO Did This Study
Tax year 2014 marked the first time individual taxpayers were required by the Patient Protection and Affordable Care Act (PPACA) to report health care coverage information on their tax returns. Taxpayers reported on whether they had health care coverage, had an exemption from the coverage requirement, or owed a tax penalty (the SRP). Most taxpayers who received coverage through a health insurance marketplace were also eligible for an advance PTC to make their coverage more affordable. Marketplace customers can choose to have the PTC paid in advance to their insurance company or may claim all of the credit when they file their tax returns. GAO was asked to review IRS implementation of the individual shared responsibility and PTC tax provisions.
Among other objectives, this report examines (1) IRS's implementation of these PPACA requirements; and (2) IRS efforts to collaborate with key external stakeholders. To address these objectives, GAO reviewed documents from IRS and CMS; analyzed preliminary 2014 tax year data; and interviewed officials from IRS, CMS, marketplaces and other key external stakeholders, such as tax preparers and tax software companies.
What GAO Recommends
GAO recommendations include that IRS (1) assess whether marketplace data delays are an ongoing problem, (2) assess the reliability of the data for IRS matching, (3) work with CMS to get complete data and track the aggregate gap between advance PTC paid and reported, and (4) evaluate its collaboration efforts. IRS generally agreed with GAO's recommendations.
For more information, contact James R. McTigue, Jr., at (202) 512-9110 or McTigueJ@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-641, Motor Carrier Safety: Additional Research Standards and Truck Drivers' Schedule Data Could Allow More Accurate Assessments of the Hours of Service Rule, July 29, 2015http://www.gao.gov/products/GAO-15-641?source=ra
What GAO Found
GAO found that the January 2014 study issued by the Federal Motor Carrier Safety Administration (FMCSA) to examine the efficacy of its hours of service (HOS) rule—a regulation that governs how many hours truck drivers transporting freight can work—followed most generally accepted research standards. However, FMCSA did not completely meet certain research standards such as reporting limitations and linking the conclusions to the results. For example, by not adhering to these standards, FMCSA's conclusion in the study about the extent to which crash risk is reduced by the HOS rule may be overstated. GAO found that FMCSA has not adopted guidance on the most appropriate methods for designing, analyzing, and reporting the results of scientific research. Without such guidance, FMCSA may be at risk for excluding critical elements in research it undertakes to evaluate the safety of its rules, leaving itself open to criticism.
FMCSA made several assumptions and anticipated certain effects of the HOS rule in the regulatory impact analysis. Specifically, to estimate the economic costs of the rule, FMCSA assumed that some drivers would lose a certain amount of driving and on-duty time and then estimated the amount and cost of the work time lost. Further, FMCSA assumed that reduced work time could increase a driver's opportunity to sleep, leading to safety and health benefits. Assessing the effectiveness of the HOS rule is difficult because of the limited availability of representative driver schedule data (i.e., records of drivers' work hours). Nevertheless, GAO's analysis of a limited sample of available data provides some insight into the rule's effects and the extent to which they aligned with FMCSA's assumptions and estimates. For example, according to GAO's analysis, some drivers at a sample of 16 for-hire carriers who worked the longest hours (over 65 hours per work week) reduced their work hours after the rule went into effect, a finding consistent with FMCSA's assumptions that drivers working over 65 hours were more likely to be affected. However, GAO's analysis found that drivers who worked less than 65 hours per work week also changed their schedules after the rule went into effect, a result not anticipated by FMCSA.
The ability of FMCSA and others to assess the effects of rules, such as the 2011 HOS rule, is impacted by the limited availability of representative driver schedule data. No organization collects or maintains a centralized database with such data that can be generalized to the motor carrier industry as a whole. Collecting schedule data has historically been difficult, but a recent statutory change that requires carriers to electronically record and store these data provides a potential data source for the future. However, before these data can be used for research purposes several challenges would have to be addressed. First, there are statutory limits on the use of these data for purposes other than enforcing motor carrier safety regulations. Additionally, privacy and cost concerns must be resolved before these data could be made available for analysis. According to FMCSA officials, they do not plan to study how to use these data in a way that will address privacy and cost concerns, in part, because of the statutory limits. Given the potential value of these data to future regulatory analysis, it may be important to provide Congress with information on how these data can be extracted, stored, and analyzed while addressing any privacy and cost concerns.
Why GAO Did This Study
FMCSA—within the Department of Transportation (DOT)—issues rules to address safety concerns of the motor carrier industry, including on truck drivers' HOS. In July 2013, FMCSA began to enforce three new provisions of its HOS rule. GAO was asked to review a 2014 FMCSA study on the rule, as well as the rule's assumptions and effects. This report (1) compares the study to generally accepted research standards, and (2) identifies the assumptions used to estimate the rule's costs and benefits and the rule's driver-operation, economic, safety, and health effects.
GAO identified research standards that professional associations, academics, and GAO's prior work have used. GAO evaluated the 2014 FMCSA study against these standards. GAO also compared FMCSA's assumptions about how drivers would be affected by the HOS rule against actual drivers' schedule data from 16 for-hire carriers that cover the years 2012 through 2014. These data include information on over 15,000 drivers per year, but are not generalizable to the motor carrier industry as a whole.
What GAO Recommends
GAO recommends that FMCSA adopt guidance outlining agency research standards. FMCSA agreed with GAO's recommendation. GAO also suggests that Congress consider directing DOT to study and report on how electronically collected driver schedule data can be extracted, stored, and analyzed in a way that addresses cost and privacy concerns.
For more information, contact Susan Fleming, (202) 512-2834, or flemings@gao.gov&nbsp;Wed, 29 Jul 2015 13:00:00 -0400GAO-15-602, Managing for Results: Practices for Effective Agency Strategic Reviews, July 29, 2015http://www.gao.gov/products/GAO-15-602?source=ra
What GAO Found
GAO identified seven practices federal agencies can employ to facilitate effective strategic reviews and illustrated aspects of those practices through examples from the strategic review processes conducted at the Departments of Agriculture (USDA), Education (Education), Homeland Security (DHS), and Housing and Urban Development (HUD), and the Environmental Protection Agency (EPA), and the National Aeronautics and Space Administration (NASA).
1. Establish a process for conducting strategic reviews. NASA developed a strategic review process that involved senior leaders in individual assessments and a rating of each strategic objective, a crosscutting review to identify themes and provide independent rating recommendations, and a briefing to the Chief Operating Officer to determine final ratings.
2. Clarify and clearly define measurable outcomes for each strategic objective. NASA officials defined what would constitute success in 10 years for each strategic objective and used underlying performance goals, indicators, and milestones to better plan for and understand near-term progress towards their long-term scientific outcomes.
3. Review the strategies and other factors that influence the outcomes and determine which are most important. USDA's Food and Nutrition Service developed a model showing how the output of its programs contribute to relevant near-term and long-term outcomes related to the department's objective to improve access to nutritious foods. The model also identifies external factors that could influence progress, such as food prices.
4. Identify and include key stakeholders in the review. Contributors from various agencies, levels of government, and sectors may be involved in achieving an outcome. While the six agencies involved internal stakeholders in their strategic reviews, GAO did not find instances of external stakeholder involvement. In some cases, agencies took steps to incorporate external perspectives, such as HUD leveraging its existing relationship with officials at the U.S. Interagency Council on Homelessness to better understand how other federal programs are contributing to progress towards its objective to end homelessness for target populations.
5. Identify and assess evidence related to strategic objective achievement. For EPA's objective to promote sustainable and livable communities, officials developed a framework and inventory of relevant performance information, scientific studies, academic research, and program evaluations, which they then assessed and categorized by strength.
6. Assess effectiveness in achieving strategic objectives and identify actions needed to improve implementation and impact. For DHS's goal to safeguard and expedite lawful trade and travel, officials determined that sufficient progress was being made, but identified gaps in monitoring efforts, such as a lack of performance measures related to travel. DHS officials are taking steps to develop measures to address the gaps.
7. Develop a process to monitor progress on needed actions. HUD broadened its existing process for tracking progress on actions items identified at its quarterly performance reviews to also cover those from strategic reviews. HUD staff update the status of each action item regularly—planned to be biweekly following the 2015 strategic reviews.
Why GAO Did This Study
The GPRA Modernization Act of 2010 (GPRAMA) provides important tools that can help inform federal decision making. In implementing GPRAMA, the Office of Management and Budget (OMB) established a strategic review process in which agencies, beginning in 2014, were to annually assess their progress in achieving each strategic objective—the outcome the agency is intending to achieve—in their strategic plans.
GPRAMA requires GAO to periodically review its implementation. This report identifies and illustrates practices that facilitate effective strategic reviews.
To identify such practices, GAO analyzed and synthesized information from a variety of sources, including GPRAMA's requirements; OMB guidance; a review of relevant literature; and interviews with experts in performance management and evaluation and OMB staff. To refine and illustrate the practices, GAO reviewed strategic review documentation and interviewed relevant officials from six selected agencies: USDA, Education, DHS, HUD, EPA, and NASA. GAO selected these agencies based on several factors. This included the extent to which agency strategic review processes had a greater chance of addressing areas identified in GAO's work on fragmentation, overlap, and duplication or high-risk issues, and agency results on selected items in GAO's 2013 survey of federal managers on performance and management issues.
In commenting on a draft of this report, OMB and the six selected agencies generally agreed with the findings.
For more information, contact J. Christopher Mihm at (202) 512-6806 or mihmj@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-647, IRS Case Selection: Collection Process Is Largely Automated, but Lacks Adequate Internal Controls, July 29, 2015http://www.gao.gov/products/GAO-15-647?source=ra
What GAO Found
The Internal Revenue Service's (IRS) collection program largely uses automated processes to categorize and route unpaid tax or unfiled tax return cases for potential selection. The automated Inventory Delivery System (IDS) categorizes and routes cases based on many factors, such as type of tax and amount owed. Outside of IDS, collection managers set goals for closing cases in priority areas, such as delinquent employer payroll taxes and cases involving certain high-wealth taxpayers. If goals are at risk of not being met, officials may take action to select additional priority cases. In recent fiscal years, the collection program has exceeded nearly all case closure goals for priority cases. However, because IRS has not identified objectives for the collection program, such as fairness, it is difficult to assess the program's overall effectiveness.
GAO identified several areas where the lack of documented objectives and internal control deficiencies for categorizing and routing cases increase the risk that the collection program's mission, including fair case selection, will not be achieved. Examples of key internal control steps and deficiencies follow.
Selected Key Steps in Internal Control
Program objectives and key terms are not clearly defined: Although fairness is specified in the collection mission statement and IDS processes can affect how collection cases are selected, management has not defined fairness or any other program or case selection objectives. IRS collection's management referred to various documents as examples of program objectives. However, the documents were not specific enough nor codified in official IRS guidance to ensure proper control over the program. Without clearly defined objectives that can enhance program effectiveness, it is difficult for IRS to ensure it selected collection cases in a fair and unbiased manner.
Case categorization and routing procedures are not documented: According to management, case categorization and routing procedures were developed over several years as the result of incremental decisions and system changes. However, GAO found that the system and decisions were not documented, such as the selection of priority areas. Without documentation, it is difficult to determine whether processes are effective or consistently applied.
Effectiveness of processes is not routinely monitored : Despite some ad-hoc studies, IRS does not have procedures to periodically monitor IDS, including the dollar thresholds used to identify some cases for collection. Management could not provide GAO with justification for the thresholds because according to officials, they were set so long ago. Without periodic evaluations, out-of-date collection procedures could result in unnecessary costs or missed collections. Unadjusted dollar amounts could lead to inconsistent treatment of taxpayers over time as the real value of dollar thresholds decline over time due to inflation.
Why GAO Did This Study
IRS's collection program pursues individuals and businesses that failed to fully pay their taxes or file returns. Since 2009, the total tax debt inventory has increased 23 percent to $380 billion, while collection staff declined 23 percent. Given its large workload and declining resources, it is important that IRS make informed decisions about the collection cases it pursues to enhance compliance and confidence in the tax system.
GAO was asked to review IRS's processes for categorizing and routing collection cases for potential selection. This report (1) describes collection processes and trends in priority areas; and (2) assesses how well controls support the mission, including applying tax laws with integrity and fairness to all.
GAO reviewed IRS guidance, processes, and controls for categorizing and routing collection cases, reviewed data on results in priority areas, assessed whether IRS's controls followed Standards for Internal Control in the Federal Government , and interviewed IRS officials.
What GAO Recommends
GAO recommends that IRS take five actions to improve collection controls, such as clearly defining and documenting program objectives and control procedures, and periodically evaluating the effectiveness of controls. In commenting on a draft of this report, IRS said it generally agreed with all of GAO's recommendations.
For more information, contact James R. McTigue, Jr. at (202) 512-9110 or mctiguej@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-717, International Trade: The United States and European Union Are the Two Largest Markets Covered by Key Procurement-Related Agreements, July 29, 2015http://www.gao.gov/products/GAO-15-717?source=ra
What GAO Found
The United States is a party to, or is currently negotiating, international agreements covering government procurement with 60 countries. From 2008 through 2012 these countries together spent on average about $4.4 trillion annually to procure goods and services and to fund capital projects. This represented about a quarter of their total general government expenditures, and includes spending at the central, state, and local levels. As shown in the figure below, the United States ($1.7 trillion) and European Union ($1.6 trillion) have the largest government procurement markets of countries covered by the World Trade Organization (WTO) Agreement on Government Procurement (GPA), existing U.S. free trade agreements (FTA), the Trans-Pacific Partnership (TPP) negotiations, or the Transatlantic Trade and Investment Partnership (T-TIP) negotiations.
Average Annual Government Procurement by Countries Covered by the Agreement on Government Procurement, U.S. Free Trade Agreements, Trans-Pacific Partnership Negotiations, or Transatlantic Trade and Investment Partnership Negotiations, 2008-2012
Note: The reported value for “Remaining 32 countries” is the mean of a GAO estimate of government procurement that ranged from $1.0 trillion and to $1.3 trillion.
From 2008 through 2012, annual procurement of countries covered under the GPA was about $2.5 trillion, excluding the United States. In comparison, countries with which the United States has FTAs, including some that are also covered by the GPA, have a total annual procurement of about $500 billion to $660 billion. For TPP and T-TIP countries, potential trade opportunities for U.S. firms could arise from the United States negotiating for commitments to increase the scope of covered procurements in the 56 countries covered by existing agreements. Increased opportunities could also come from adding new countries, however, only four of the TPP and T-TIP countries are not already covered by an FTA or the GPA; these four countries have an overall average annual government procurement market of no more than $60 billion.
Why GAO Did This Study
Government procurement constitutes a significant market for international trade. However, according to officials from the Office of the United States Trade Representative, procurement markets are often closed to foreign competition. The United States has played a role in developing trade agreements that partially open government procurement markets. Specifically, it is a party to the WTO GPA and FTAs that also contain provisions granting foreign firms certain access to government procurement markets. In addition, it is currently involved in the TPP negotiations among countries of the Asia-Pacific region and T-TIP negotiations with the European Union.
As part of a larger request for information on U.S. participation in international procurement agreements, GAO was asked to provide information on the size of government procurement markets. GAO used macroeconomic data from 2008 through 2012 from the United Nations National Accounts Official Country Data database, which were the most recent, complete, and comparable macroeconomic data available, to estimate each country's general government procurement. GAO also interviewed officials from the Office of the United States Trade Representative and the Department of Commerce to gain an understanding of the procurement data available for analysis. These officials provided technical comments in response to a draft of this report, which GAO incorporated as appropriate.
For more information, contact Kimberly M. Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-752T, DATA Act: Progress Made in Initial Implementation but Challenges Must be Addressed as Efforts Proceed, July 29, 2015http://www.gao.gov/products/GAO-15-752T?source=ra
What GAO Found
Since the Digital Accountability and Transparency Act (DATA Act) became law in May 2014, the Office of Management and Budget (OMB) and the Department of the Treasury (Treasury) have taken significant steps towards implementing key provisions. These steps include the release of 27 data standards, draft technical documentation, and implementation guidance to help federal agencies meet their responsibilities under the act. However, given the complexity and government-wide scale of activities required by the DATA Act, much more remains to be done.
Data standards. OMB and Treasury have proposed standardizing 57 data elements for reporting under the act. They released 15 elements on May 8, 2015, a year after the passage of the act, and have since released 12 more. Eight of the first 15 were new elements required under the DATA Act; the balance were required under the Federal Funding Accountability and Transparency Act of 2006. GAO identified several issues that may impact the quality and ability to aggregate federal spending data. For example, GAO found: (1) the data standards may not provide a complete picture of spending by program unless OMB accelerates its efforts to produce an inventory of federal programs as required under the GPRA Modernization Act of 2010 (GPRAMA); (2) the data standards and elements may not yet represent all that are necessary to fully capture and reliably report on federal spending; and (3) the draft technical specifications GAO reviewed may result in the reporting of inconsistent information. GAO shared its observations with officials who are considering revisions and updating their technical documentation.
Governance and stakeholder engagement. OMB and Treasury have made progress in initial implementation activities by developing structures for project management and data governance as well as for obtaining stakeholder input. However, GAO found that additional effort to address the whole lifecycle of standards development will be needed to ensure that the integrity of data standards is maintained over time. Establishing these policies and procedures now could provide an opportunity for OMB and Treasury to build on existing efforts to reach out to stakeholders by taking steps to foster effective two-way communication to help ensure that the concerns of interested parties are responded to and addressed as appropriate on an ongoing and timely basis.
Recovery Operations Center (ROC). GAO's review of the potential transfer of the ROC's assets found that Treasury does not plan to assume these assets because of a number of impediments. Instead, Treasury has focused on facilitating information sharing between the ROC and Treasury's Do Not Pay initiative, which assists agencies in preventing improper payments. GAO has ongoing work on this issue and plans to issue a report later this year.
Reporting burden pilot. The DATA Act requires OMB to establish a 2-year pilot program to develop recommendations for reducing reporting burden for recipients of federal awards. The pilot was launched this May with the initiation of a national dialogue on reducing reporting burden, building of an online repository of common grants-related data elements, and addition of grants-related resources on Grants.gov. GAO also has ongoing work focusing on this pilot.
Why GAO Did This Study
The DATA Act directs OMB and Treasury to establish government-wide data standards by May 2015. The act also requires agencies to begin reporting financial spending data using these standards by May 2017 and to post spending data in machine- readable formats by May 2018. This statement is part of a series of products that GAO will provide the Congress as the DATA Act is implemented.
This statement discusses four DATA Act implementation areas to date: (1) establishment of government-wide data standards; (2) OMB and Treasury's effort to establish a governance structure and obtain stakeholder input; (3) the status of the potential transfer of the ROC's assets to Treasury; and (4) the pilot program to reduce reporting burden. GAO reviewed the first 15 data elements finalized under the act; analyzed key documents, technical specifications and applicable guidance; interviewed OMB, Treasury, HHS, and other staff as well as officials from organizations representing non-federal stakeholders; and reviewed literature.
What GAO Recommends
GAO recommends that OMB accelerate efforts to merge DATA Act purposes with the production of a federal program inventory under GPRAMA, and that OMB and Treasury (1) establish policies and processes for a governance structure to maintain the integrity of data standards over time and (2) enhance policies and procedures to provide for ongoing and effective two-way dialogue with stakeholders. OMB staff, Treasury officials, and others provided technical comments which GAO incorporated as appropriate.
For more information, contact J. Christopher Mihm, 202-512-6806, mihmj@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-707, Central America: Improved Evaluation Efforts Could Enhance Agency Programs to Reduce Unaccompanied Child Migration, July 29, 2015http://www.gao.gov/products/GAO-15-707?source=ra
What GAO Found
U.S. agencies have sought to address causes of unaccompanied alien child (UAC) migration through recent programs, such as information campaigns to deter migration, developed in response to the migration increase and other long-standing efforts. The recent migration increase was likely triggered, according to U.S. officials, by several emergent factors such as the increased presence and sophistication of human smugglers (known as coyotes) and confusion over U.S. immigration policy. Officials also noted that certain persistent conditions such as violence and poverty have worsened in certain countries. In addition to long-standing efforts, such as U.S. Agency for International Development (USAID) antipoverty programs, agencies have taken new actions. For example, Department of Homeland Security (DHS)-led investigative units have increasingly sought to disrupt human smuggling operations.
U.S. agencies have located programs based on various factors, including long-term priorities such as targeting high-poverty and -crime areas, but have adjusted to locate more programs in high-migration communities. For example, Department of State (State) officials in Guatemala said they moved programs enhancing police anticrime capabilities into such communities, and USAID officials in El Salvador said they expanded to UAC-migration-affected locations.
Most agencies have developed processes to assess the effectiveness of programs seeking to address UAC migration, but weaknesses exist in these processes for some antismuggling programs. For example, DHS has established performance measures, such as arrests, for units combating UAC smuggling, but has not established numeric or other types of targets for these measures, which would enable DHS to measure the units' progress. In addition, DHS and State have not always evaluated information campaigns intended to combat coyote misinformation. DHS launched its 2013 campaign in April, but launched its 2014 campaign in late June after migration levels peaked. Neither agency evaluated its 2014 campaign. Collecting performance information on media campaigns can have value in informing future campaign efforts to reduce child migration.
Timing of Department of Homeland Security Public Information Campaigns and Monthly Apprehensions of Unaccompanied Alien Children
Why GAO Did This Study
According to DHS, the number of UAC apprehended at the U.S.-Mexican border climbed from nearly 28,000 in fiscal year 2012 to more than 73,000 in fiscal year 2014, with nearly three-fourths of those apprehended nationals of El Salvador, Guatemala, and Honduras. Children from these three countries face a host of challenges, such as extreme violence and persistent poverty. Those who migrate can encounter even more dangers, such as robbery and abuse.
GAO was asked to review issues related to UAC migration. In February 2015, GAO reported on U.S. assistance to Central America addressing the rapid increase in UAC migration. This report reviews (1) U.S. assistance in El Salvador, Guatemala, and Honduras addressing agency-identified causes of UAC migration; (2) how agencies have determined where to locate these assistance efforts; and (3) the extent to which agencies have developed processes to assess the effectiveness of programs seeking to address UAC migration. GAO reviewed agency documents and interviewed officials in Washington, D.C., and in Central America.
What GAO Recommends
GAO recommends that DHS and State take steps to integrate evaluations into their planning for, and implementation of, future information campaigns intended to deter migration. GAO also recommends that DHS establish performance targets for its investigative units. DHS concurred with both recommendations, and State concurred with the one recommendation directed to it.
For more information, contact Kimberly Gianopoulos at (202)-512-8612&nbsp;or gianopoulosk@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-562, Bureau of Land Management: Improvements Needed in Internal Controls over Mining Law Administration Program Funds, July 23, 2015http://www.gao.gov/products/GAO-15-562?source=ra
What GAO Found
The Department of the Interior's (Interior) Bureau of Land Management's (BLM) Mining Law Administration Program (mining law program) was appropriated and expended almost $40 million annually from fiscal years 2011 through 2013. Funds are to be used for mining law program activities such as administering mining claims and processing notices for mineral exploration. The mining law program's largest expenditures include personnel compensation and contractual services and supplies, which account for over 96 percent of its expenditures.
BLM has designed internal controls, including policies and procedures over mining law program funds, but some of them are inconsistent, outdated, and not effectively communicated. GAO's statistical tests of fiscal year 2013 nonpayroll mining law program expenditures showed that BLM did not effectively implement controls to reasonably assure that such mining law program transactions were properly recorded and supported.
Estimated Percentages of Control Deficiencies in Nonpayroll Expenditures of the Mining Law Administration Program (Mining Law Program) for Fiscal Year 2013
Note: All percentage estimates from the tests have margins of error at the 95 percent confidence level of plus or minus 9 percentage points or less.
In addition, in interviews conducted at selected BLM offices, GAO found that some employees were charging hours of work to the mining law program based on funding allocations or supervisor instructions rather than the actual work performed, as required by BLM policies. While these examples cannot be generalized to all BLM employees, they illustrate control deficiencies that increase the risk that BLM employees are not charging the program correctly.
GAO found that internal control implementation deficiencies were the result of design flaws in BLM's policies and procedures as well as the lack of training and monitoring to reinforce them. Because of these deficiencies, BLM does not have reasonable assurance that mining law program expenditures relate to or are reasonably allocated to the program. As a result, the information in BLM's financial records may be at risk of not reflecting the actual cost of the mining law program.
Why GAO Did This Study
BLM's mining law program is responsible for managing the exploration and development of minerals, such as gold, silver, and copper, on federal land. The program is funded through fees collected from holders of mining claims and sites, subject to limits in annual appropriations acts, and is appropriated funds from the Department of the Treasury to the extent that the actual fees collected fall short of such limits.
GAO was asked to review the funding and spending of the mining law program. This report discusses (1) the amounts appropriated and expended for the program and (2) the extent to which BLM designed and implemented internal controls to reasonably assure that designated funds are spent only on mining law program operations. To address these objectives, GAO (1) reviewed relevant BLM policies and procedures and financial data, (2) conducted tests on a statistical random sample of fiscal year 2013 nonpayroll expenditures, and (3) interviewed BLM officials and employees.
What GAO Recommends
GAO recommends that BLM (1) review and update its mining law program policies and procedures, as necessary; (2) establish procedures for communicating such changes; (3) develop and implement a related training program; and (4) regularly monitor compliance with its policies and procedures. Interior generally agreed with the findings, concurred with GAO's recommendations, and described actions taken or planned to address each recommendation.
For more information, contact Beryl H. Davis at (202) 512-2623 or davisbh@gao.gov.Wed, 29 Jul 2015 13:00:00 -0400GAO-15-652, Technology Assessment: Nuclear Reactors: Status and Challenges in Development and Deployment of New Commercial Concepts, July 28, 2015http://www.gao.gov/products/GAO-15-652?source=ra
What GAO Found
In the United States, four light water small modular reactors (SMRs)—nuclear power reactors with a generating capacity of less than 300 MW of electricity—have been developed to the point that the reactor designers have begun discussing design certification and license applications with the Nuclear Regulatory Commission (NRC), and one SMR designer has established time-frames for applications to NRC and construction of a power plant. The Department of Energy (DOE) has provided financial support to the designers of two SMRs for reactor certification and licensing work. DOE supports the SMR design by NuScale through a cost-sharing agreement in which DOE will pay as much as half of NuScale's costs— up to $217 million over 5 years—for certifying the design. The SMR design by mPower has a similar cost-sharing agreement with DOE, but DOE is no longer providing funds because mPower has scaled back its efforts while it looks for additional investors. NuScale expects to submit a design certification application to NRC in late 2016, with its first power plant beginning operation as early as 2023. Other SMR designers do not yet have established time frames for such applications. DOE also supports research and development (R&amp;D) activities on advanced reactor concepts that focus on the high temperature gas reactor and the sodium fast reactor. DOE provides this support in areas such as fuels and material qualification and reactor safety studies. DOE and NRC officials do not expect applications for advanced reactors for at least 5 years.
According to DOE officials and reactor designers, both SMRs and advanced reactors are intended to provide benefits that could facilitate the use of nuclear reactors in new markets or commercial applications. SMR designers plan to decrease the overall cost and time for reactor construction compared with existing large light water reactors (LWRs), without significantly increasing ongoing operational costs. They told GAO they expect that the smaller size of SMRs may expand the locations where a nuclear power plant could be constructed. For example, they may be used in remote or rural areas that have lower electricity demands or smaller distribution systems. DOE officials and reactor designers expect advanced reactors to operate at higher temperatures and therefore they could generate electricity more efficiently. Furthermore, they told GAO heat from these higher temperature reactors could be used directly in certain industrial processes that currently depend on fossil fuels. Some advanced reactors may also allow for improved spent nuclear fuel recycling and management.
DOE officials and SMR and advanced reactor designers told GAO they face challenges in developing and deploying these reactors. SMR designers face technical challenges in demonstrating economic feasibility and safety without increasing reactor complexity, and advanced reactor designers face greater technical challenges because advanced reactors differ more from current reactors than SMRs. Reactor designers told GAO they face challenges associated with the up to $1 billion to $2 billion cost of developing and certifying a design. Even with a reactor design ready to submit to NRC, the licensing and construction can take nearly a decade or more before a reactor is operational. DOE officials, members of GAO's expert group, and reactor designers said that the cost and time needed to certify or license a reactor design and construct it, along with uncertainty about the energy market in the future and potential customer interest, create obstacles to the development and deployment of new reactors.
Why GAO Did This Study
Energy demand in the United States is expected to continue to grow over the coming decades, and DOE considers nuclear energy to be one way to help meet this increased demand without producing air pollution. However, the current domestic commercial nuclear reactor fleet, consisting of 99 large LWRs that provide about 20 percent of U.S. electricity, is aging, and some reactors have shut down in recent years. LWRs use light, or ordinary, water to cool the reactor. New reactor concepts are under development as alternative energy options. Light water SMRs have some similarities, including the coolant used, to the existing large LWRs, and advanced reactors differ more from the large LWRs. Both new reactor concepts differ from the existing large LWRs in potential applications.
GAO was asked to conduct a technology assessment of these new reactor concepts in the United States. This report discusses (1) the status of light water SMR and advanced reactor concepts under development; (2) the intended benefits of these new reactor concepts; and (3) the challenges associated with developing and deploying these new types of reactors. GAO reviewed documents from DOE and NRC, and interviewed DOE and NRC staff as well as industry representatives involved in developing reactors. GAO, with the assistance of the National Academies, convened a meeting with a group of 20 experts on nuclear reactor development and related issues to provide additional information.
For more information, contact Chief Scientist Timothy M. Persons at (202) 512-6522 or personst@gao.gov or Frank Rusco at (202) 512-3841 or ruscof@gao.gov.Tue, 28 Jul 2015 13:00:00 -0400GAO-15-792T, High-Containment Laboratories: Preliminary Observations on Federal Efforts to Address Weaknesses Exposed by Recent Safety Lapses, July 28, 2015http://www.gao.gov/products/GAO-15-792T?source=ra
What GAO Found
Recent safety lapses—including shipments of live anthrax bacteria from the Department of Defense (DOD) to U.S. and international laboratories and potential exposures of Centers for Disease Control and Prevention (CDC) laboratory personnel to live anthrax bacteria—have illustrated multiple breakdowns in compliance with established policies and inadequate oversight of high-containment laboratories. In these laboratories, researchers work with potentially high-risk biological agents that may result in serious or lethal infection in humans. Preliminary observations from GAO's ongoing work show that DOD and CDC have begun to address weaknesses in the management of their high-containment laboratories, but their activities have not yet been fully implemented. GAO's ongoing work will include further examination of the status of DOD's and CDC's activities to improve management of high-containment laboratories.
DOD began taking steps to address weaknesses in its management of high-containment laboratories in 2012 by reviewing and revising biosecurity policies and procedures. According to officials, the revised biosecurity policies will require all DOD laboratories that conduct research with certain high-risk biological agents to submit all inspection reports to senior DOD management, which was not previously required. DOD plans to finalize these policies by September 2015. DOD also plans to make further changes to these policies as a result of its assessment of the May 2015 anthrax incident, after the first set of revisions is finalized. DOD has also begun to track biosafety and biosecurity incidents at the senior department level, such as potential exposures to or misuse of biological agents, which it had not done prior to the May 2015 anthrax incident. DOD officials said the May 2015 incident is the first incident that DOD has tracked at the senior department level.
CDC also began taking steps to address weaknesses identified in internal and external working group assessments of the June 2014 anthrax incident and other safety incidents but has not yet completed implementing some recommendations intended to improve its laboratory oversight. For example, an internal workgroup recommended that CDC develop agency-wide policies to provide clear and consistent requirements for biosafety for all agency laboratories. In response, CDC developed a specimen transport policy but has not developed other agency-wide policies, such as requirements for laboratory documentation and emergency protocols.
Since 2007, GAO has reported on issues associated with high-containment laboratories and recommended improvements for federal oversight. GAO's prior work recommended the establishment of a single federal entity to (1) conduct government-wide strategic planning for requirements for high-containment laboratories, including assessment of their risks, and (2) develop national standards for designing, constructing, commissioning, operating, and maintaining such laboratories. Federal departments to which GAO's recommendations were addressed agreed with them and have conducted some activities to respond but have not implemented the recommendation to establish a single federal entity with responsibility for oversight of high-containment laboratories.
Why GAO Did This Study
Recent safety lapses at high-containment laboratories raise questions about how federal departments and agencies manage high-risk biological agents. DOD and CDC both conduct research on high-risk biological agents at their respective laboratories. Biosafety and biosecurity practices in these laboratories are intended to reduce exposure to, and prevent loss, theft, or misuse of, biological agents. CDC regulates the possession, use, and transfer of certain biological agents that pose potentially severe threats to public health under the select agent program.
This statement summarizes (1) preliminary observations from ongoing GAO work on federal laboratories' biosafety and biosecurity policies and practices and (2) GAO's past work on oversight of high-containment laboratories. To conduct ongoing and past work, GAO reviewed documentation and interviewed federal agency officials, including those from DOD and CDC, about policies and procedures for high-containment laboratories; efforts to monitor compliance and evaluate effectiveness of biosafety and biosecurity policies and practices; and the status of federal oversight activities.
What GAO Recommends
GAO has previously made recommendations to agencies to enhance biosafety and biosecurity. Because this work is preliminary, GAO is making no new recommendations at this time. GAO shared preliminary observations from this statement with DOD and CDC and incorporated comments as appropriate.
For more information, contact Marcia Crosse at (202) 512-7114 or crossem@gao.gov.Tue, 28 Jul 2015 13:00:00 -0400GAO-15-593SP, A Framework for Managing Fraud Risks in Federal Programs, July 28, 2015http://www.gao.gov/products/GAO-15-593SP?source=ra
What GAO Found
To help managers combat fraud and preserve integrity in government agencies and programs, GAO identified leading practices for managing fraud risks and organized them into a conceptual framework called the Fraud Risk Management Framework (the Framework). The Framework encompasses control activities to prevent, detect, and respond to fraud, with an emphasis on prevention, as well as structures and environmental factors that influence or help managers achieve their objective to mitigate fraud risks. In addition, the Framework highlights the importance of monitoring and incorporating feedback, which are ongoing practices that apply to all four of the components described below.
The Fraud Risk Management Framework and Selected Leading Practices
Why GAO Did This Study
Fraud poses a significant risk to the integrity of federal programs and erodes public trust in government. Managers of federal programs maintain the primary responsibility for enhancing program integrity. Legislation, guidance by the Office of Management and Budget (OMB), and new internal control standards have increasingly focused on the need for program managers to take a strategic approach to managing improper payments and risks, including fraud. Moreover, GAO's prior reviews highlight opportunities for federal managers to take a more strategic, risk-based approach to managing fraud risks and developing effective antifraud controls. Proactive fraud risk management is meant to facilitate a program's mission and strategic goals by ensuring that taxpayer dollars and government services serve their intended purposes.
The objective of this study is to identify leading practices and to conceptualize these practices into a risk-based framework to aid program managers in managing fraud risks. To address this objective, GAO conducted three focus groups consisting of antifraud professionals. In addition, GAO interviewed federal Offices of Inspector General (OIG), national audit institutions from other countries, the World Bank, the Organisation for Economic Co-operation and Development, as well as antifraud experts representing private companies, state and local audit associations, and nonprofit entities. GAO also conducted an extensive literature review and obtained independent validation of leading practices from program officials.
For more information, contact Steve Lord at (202) 512-6722 or LordS@gao.gov.Tue, 28 Jul 2015 13:00:00 -0400GAO-15-471, Prescription Drugs: More DEA Information about Registrants' Controlled Substances Roles Could Improve Their Understanding and Help Ensure Access, June 25, 2015http://www.gao.gov/products/GAO-15-471?source=ra
What GAO Found
GAO's four nationally representative surveys of Drug Enforcement Administration (DEA) registrants showed that these registrants vary in the extent of their interaction with DEA related to their roles and responsibilities for preventing prescription drug abuse and diversion under the Controlled Substances Act (CSA). Specifically, GAO found that distributors and chain pharmacy corporate offices interacted with DEA more often than individual pharmacies or health care practitioners. The surveys also showed that many registrants are not aware of various DEA resources. For example, GAO estimates that 70 percent of practitioners are not aware of DEA's Practitioner's Manual. Of those registrants that have interacted with DEA, most were generally satisfied with those interactions. For example, 92 percent of distributors that communicated with DEA field office staff found them “very” or “moderately” helpful. However, some distributors, individual pharmacies, and chain pharmacy corporate offices want improved guidance from, and additional communication with, DEA about their CSA roles and responsibilities. For example, 36 of 55 distributors commented that more communication or information from, or interactions with, DEA would be helpful. DEA officials indicated that they do not believe there is a need for more registrant guidance or communication. Federal internal control standards call for adequate communication with stakeholders. Without more registrant awareness of DEA resources and adequate guidance and communication from DEA, registrants may not fully understand or meet their CSA roles and responsibilities.
Officials GAO interviewed from 14 of 16 state government agencies and 24 of 26 national associations said that they interact with DEA through various methods. Thirteen of 14 state agencies and 10 of 17 national associations that commented about their satisfaction with DEA interactions said that they were generally satisfied; however, some associations wanted improved DEA communication. Because the additional communication that four associations want relates to their members' CSA roles and responsibilities, improved DEA communication with and guidance for registrants may address some of the associations' concerns.
Among those offering a perspective, between 31 and 38 percent of registrants GAO surveyed and 13 of 17 state agencies and national associations GAO interviewed believe that DEA enforcement actions have helped decrease prescription drug abuse and diversion. GAO's survey results also showed that over half of DEA registrants have changed certain business practices as a result of DEA enforcement actions or the business climate these actions may have created. For example, GAO estimates that over half of distributors placed stricter limits on the quantities of controlled substances that their customers (e.g., pharmacies) could order, and that most of these distributors (84 percent) were influenced to a “great” or “moderate extent” by DEA's enforcement actions. Many individual pharmacies (52 of 84) and chain pharmacy corporate offices (18 of 29) reported that these stricter limits have limited, to a “great” or “moderate extent,” their ability to supply drugs to those with legitimate needs. While DEA officials said they generally did not believe that enforcement actions have negatively affected access, better communication and guidance from DEA could help registrants make business decisions that balance ensuring access for patients with legitimate needs with controlling abuse and diversion.
Why GAO Did This Study
The DEA administers and enforces the CSA as it pertains to ensuring the availability of controlled substances, including certain prescription drugs, for legitimate use while limiting their availability for abuse and diversion. The CSA requires those handling controlled substances to register with DEA.
GAO was asked to review registrants' and others' interactions with DEA. This report examines (1) to what extent registrants interact with DEA about their CSA responsibilities, and registrants' perspectives on those interactions, (2) how state agencies and national associations interact with DEA, and their perspectives on those interactions, and (3) stakeholders' perspectives on how DEA enforcement actions have affected prescription drug abuse and diversion and access to those drugs for legitimate needs. GAO administered nationally representative web-based surveys to DEA-registered distributors, individual pharmacies, chain pharmacy corporate offices, and practitioners. GAO also interviewed officials from DEA, 26 national associations and other nonprofits, and 16 government agencies in four states representing varying geographic regions and overdose death rates.
What GAO Recommends
GAO recommends that DEA take three actions to improve communication with and guidance for registrants about their CSA roles and responsibilities. DEA described actions that it planned to take to implement GAO's recommendations; however, GAO identified additional actions DEA should take to fully implement the recommendations.
For more information, contact Linda Kohn at (202) 512-7114 or kohnl@gao.gov.Mon, 27 Jul 2015 13:00:00 -0400GAO-15-185, Mortgage Reforms: Actions Needed to Help Assess Effects of New Regulations, June 25, 2015http://www.gao.gov/products/GAO-15-185?source=ra
What GAO Found
Federal agency officials, market participants, and observers estimated that the qualified mortgage (QM) and qualified residential mortgage (QRM) regulations would have limited initial effects because most loans originated in recent years largely conformed with QM criteria.
The QM regulations, which address lenders' responsibilities to determine a borrower's ability to repay a loan, set forth standards that include prohibitions on risky loan features (such as interest-only or balloon payments) and limits on points and fees. Lenders that originate QM loans receive certain liability protections.
Securities collateralized exclusively by residential mortgages that are “qualified residential mortgages” are exempt from risk-retention requirements. The QRM regulations align the QRM definition with QM; thus, securities collateralized solely by QM loans are not subject to risk-retention requirements.
The analyses GAO reviewed estimated limited effects on the availability of mortgages for most borrowers and that any cost increases (for borrowers, lenders, and investors) would mostly stem from litigation and compliance issues. According to agency officials and observers, the QRM regulations were unlikely to have a significant initial effect on the availability or securitization of mortgages in the current market, largely because the majority of loans originated were expected to be QM loans. However, questions remain about the size and viability of the secondary market for non-QRM-backed securities.
Agencies have begun planning their reviews of the QM and QRM regulations (due January and commencing December 2019, respectively); however, these efforts have not included elements important for conducting effective retrospective reviews. Federal guidance encourages agencies to preplan their retrospective reviews and carefully consider how best to promote empirical testing of the effects of rules. To varying degrees, the relevant agencies have identified outcomes to examine, potential data sources, and analytical methods. But existing data lack important information relevant to the regulations (such as loan performance or borrower debt to income) and planned data enhancements may not be available before agencies start the reviews. The Bureau of Consumer Financial Protection (CFPB) has proposed expanding Home Mortgage Disclosure Act data reporting requirements, but the earliest that the enhanced data will be available is 2017. Similarly, the Department of Housing and Urban Development (HUD) identified how it intends to examine its QM regulations and some potential data sources but has yet to determine how it would measure the effects of these regulations, including metrics, baselines, and analytical methods. Agencies also have not specified how they will conduct their reviews, including determining which data and analytical methods to use. Finalizing plans to retrospectively review the mortgage regulations will position the agencies to better measure the effects of the QM and QRM regulations and identify any unintended consequences. Additionally, the agencies could better understand data limitations and methodological challenges and have sufficient time to develop methods to deal with these limitations and challenges.
Why GAO Did This Study
Amid concerns that risky mortgage products and poor underwriting standards contributed to the recent housing crisis, Congress included mortgage reform provisions (QM and QRM) in the Dodd-Frank Wall Street Reform and Consumer Protection Act. CFPB's regulations establishing standards for QM loans became effective in January 2014. More recently, six agencies jointly issued the final QRM rule that will become effective in December 2015. GAO was asked to review possible effects of these regulations. This report (1) discusses views on the expected effects of the QM and QRM regulations, and (2) examines the extent of agency planning for reviewing the regulations' effects, among its objectives. GAO's methodologies included identifying and reviewing academic, industry, and federal agency analyses on the expected effects of the regulations. GAO also reviewed federal guidance on retrospective reviews and interviewed agency officials to assess agency efforts to examine the effects of the QM and QRM regulations.
What GAO Recommends
CFPB, HUD, and the six agencies responsible for the QRM regulations should complete plans to review the QM and QRM regulations, including identifying specific metrics, baselines, and analytical methods. CFPB, HUD, and one QRM agency—the Federal Deposit Insurance Corporation—concurred or agreed with the recommendations. The other QRM agencies did not explicitly agree with the recommendations, but outlined ongoing efforts to plan their reviews.
For more information, contact Mathew J. Scirè at (202) 512-8678 or sciremj@gao.gov.Mon, 27 Jul 2015 13:00:00 -0400GAO-15-534, International Insurance Capital Standards: Collaboration among U.S. Stakeholders Has Improved but Could Be Enhanced, June 25, 2015http://www.gao.gov/products/GAO-15-534?source=ra
What GAO Found
International capital standards establishing the amounts of capital that large, internationally active insurers could be required to maintain are in the early stages of development, and much about them remains uncertain. For example, the International Association of Insurance Supervisors (IAIS) has not finalized the methodologies that will be used to determine the required capital levels. Further, implementing the standards at the group level in the United States could be challenging since states, the primary regulators, focus on individual insurance entities rather than on group-level entities or holding companies. At this time, it is unclear which U.S. regulator would implement and enforce the standards or how they would compare with current U.S. capital standards.
With so many unknowns, some stakeholders agreed that it was too early to determine the effects of the proposed standards. However, some stakeholders said that any effects could be minimal, since U.S. insurers generally hold high levels of capital. Other stakeholders said that potential positive effects could include the promotion of comparable standards across jurisdictions and the removal of incentives for companies to select locations based on regulatory differences. Some stakeholders also mentioned potential negative effects, including higher costs for insurers required to hold additional capital that could create incentives to stop offering some products or to raise prices.
Stakeholders expressed mixed views on the need for international capital standards to address systemic risk. Many stakeholders said that traditional insurance activities were not likely to pose systemic risk, which has been described as a key reason for pursuing the standards. But other stakeholders said that nontraditional noninsurance activities, such as credit default swaps and guaranteed investment contracts, could increase insurers' interconnectedness with other financial market participants and cause systemic effects should an insurer fail. These types of activities contributed to financial problems for the American International Group, Inc. during the 2007-2009 financial crisis. IAIS officials and others said that international capital standards could help address risks from these activities. But some state regulators and industry representatives noted that current U.S. risk-based capital standards and other regulatory tools adequately protected U.S. policyholders and that regulators were coordinating to address potential group-wide risks.
The U.S. members of IAIS—including the Federal Insurance Office (FIO), the Federal Reserve, and the National Association of Insurance Commissioners (NAIC)— have improved coordination among themselves as a group but could do more to incorporate leading practices for collaboration. GAO found that the collaborative efforts members had made were consistent with some leading practices, such as establishing shared goals. But U.S. IAIS members have not followed other leading practices, such as ensuring that leadership will be sustained in the long term and publicly reporting on their collaborative efforts. The members said that their efforts were still in the early stages. Adopting these practices would allow U.S. IAIS members to better advocate for standards that reflect the interests of U.S. insurance regulators, industry, and consumers.
Why GAO Did This Study
Large, internationally active insurance companies accounted for 28 percent of the aggregate insurance premiums underwritten in the United States in 2014. IAIS is developing international group-level capital standards for these insurers. Although these standards are not yet complete and U.S. regulators have not yet determined how they might be implemented, some regulators and insurers have expressed concerns. GAO was asked to review the potential effects of the standards, the need for them, and U.S. involvement in their development.
This report examines (1) the status of the development and implementation of the international standards; (2) what is known about their potential effects; (3) views on the need for the standards; and (4) the extent to which U.S. regulators are collaborating in developing a U.S. position on the standards. To address these questions, GAO reviewed IAIS and U.S. agency documentation and relevant literature; assessed the extent of collaboration compared to leading practices; and interviewed regulators, IAIS officials, insurers, academics, and other stakeholders that would be affected by or have commented on the standards.
What GAO Recommends
To enhance and sustain U.S. involvement in the development process, FIO, in consultation with the Federal Reserve and NAIC, should take steps to sustain leadership over the long term and publicly report on their collaborative efforts.FIO concurred with the recommendation, stating that it would build on existing collaboration efforts.
For more information, contact Lawrance Evans at (202) 512-8678 or evansl@gao.gov.Mon, 27 Jul 2015 13:00:00 -0400GAO-15-489, Facilities Modernization: DOD Guidance and Processes Reflect Leading Practices for Capital Planning, July 27, 2015http://www.gao.gov/products/GAO-15-489?source=ra
What GAO Found
In 2005, the Office of the Secretary of Defense (OSD) developed the Facilities Modernization Model (the model) to estimate the Department of Defense's (DOD) annual-funding requirements for modernization. However, OSD officials stated that they decided in 2009 not to implement the model and identified two primary reasons for their decision. First, OSD senior leadership determined the model was based in part on a key assumption about the expected service life of DOD facilities that officials did not believe reflected the difficulty in predicting new technologies and mission changes that would affect modernization of DOD facilities Second, OSD officials determined that the model's output—the estimate of total annual funding for modernization requirements—did not accurately account for the cyclical nature of facility modernization, in which the costs could be higher in one year and lower in the next. Therefore, the officials stated that OSD determined that the model was not a reliable forecasting tool for the modernization funding requirements as part of DOD's budget submission. Without the model, DOD makes its capital-investment decisions, including those related to facilities modernization, using a mix of projections and project-by-project estimates.
GAO found that DOD reflects leading practices for capital planning in its guidance and processes related to the development of modernization funding requirements. Key leading practices for using information to make capital-investment decisions, based primarily on a GAO guide and Office of Management and Budget guidance, are shown in the figure below.
Key Leading Practices for Using Information to Make Capital-Investment Decisions
For example, DOD guidance establishes processes for determining funding requirements—including modernization need—and reviewing and approving budget requests by taking into consideration the costs of proposed assets, the levels of risk involved in modernizing assets, and their importance to DOD's mission. The guidance also requires the military services to prioritize projects. Further, DOD guidance establishes an annual budget process for identifying and allocating resources for capital investments, including modernization, to achieve DOD's goals and objectives as aligned with its strategic plans. In addition, DOD guidance calls for a long-term capital plan that displays resources needed for both operation and maintenance and for military construction, including facilities modernization.
Why GAO Did This Study
DOD maintains a global real-property portfolio of over 561,000 facilities, which DOD modernizes to help support its mission and workforce. Modernization includes altering or replacing a facility to implement a new mission or higher life and safety standards. Several years ago, OSD began an effort to develop more accurate methods for estimating installation-support funding needs, including modernization.
House Report 113-446, accompanying H.R. 4435, a proposed bill for the National Defense Authorization Act for Fiscal Year 2015, included a provision for GAO to review OSD's model. This report provides (1) an overview of OSD's development of the model and reasons for not implementing it, and in the absence of the model, (2) an assessment of the extent to which DOD guidance and processes related to capital-investment decisions, including modernization, reflect leading practices for capital planning.
GAO reviewed documentation and interviewed OSD officials involved in the model's development and the decision not to implement it. GAO also compared relevant DOD guidance—including directives, policy memorandums, and processes, such as the Planning, Programming, Budgeting, and Execution process—to key leading practices for capital planning. GAO did not evaluate DOD's implementation of its guidance.
GAO is not making recommendations in this report. DOD provided written technical comments, which were incorporated into the report as appropriate.
For more information, contact Johana Ayers at (202) 512-5741 or ayersj@gao.gov.Mon, 27 Jul 2015 13:00:00 -0400